If you’re reading this you have probably heard about the rule changes to the real estate industry as of June 15, 2018? Well if so, you are probably confused – like most in the industry, Real Estate Agents and Clients alike. It seems as though everyone is trying to understand the new changes and how it impacts their daily lives. I will try to simplify it for you.
At the heart of all these changes; the Council is trying to better protect consumers … you. Which, frankly is probably a really good thing. Real estate consumers need to be better informed, protected and educated, so they can make the best real estate decisions possible.
Below are the coles notes of the changes:
The way Real Estate Agents interact with consumers has now changed. The good ole trusty “Working with a Realtor brochure” has now been replaced with “Disclosure of Representation in Trading Services” form. Essentially, before agreeing to a particular relationship with a Real Estate Agent, a consumer needs to understand the essential components of the relationship. There are 3 relationships consumers can choose from:
- Sole Agency (represented)
- No Agency (unrepresented party)
- Dual Agency
The choice can only be made when the consumer is fully informed and understands the benefits and risks of the different types of relationships. What is interesting in my opinion, is that it is actually not required that this form be signed by the client. It is “optional”. Hmm.
There are certain times where consumers will choose to be “unrepresented” – if this occurs, licensees are only allowed to provide very limited trading services in a no agency relationship. There is an additional disclosure required that now has to be signed called “Disclosure to Unrepresented Parties” form. What are the risks of being an “unrepresented party”? Well as the consumer, you are not entitled to special legal duties such as:
- Loyalty: the real estate professionals involved in a transaction are representing clients with competing interests to yours. They must be loyal to their clients, not you.
- No duty to avoid conflicts: no real estate professional is acting in your interests.
- No full disclosure: real estate professionals involved do not have a duty to give you all relevant information.
- No confidentiality: the real estate professionals must share any information you tell them with their client.
Disclosure to Sellers of Expected Remuneration
How much does commission really add up to? I know, it can be confusing at times when you are looking at large property prices and various percentages. In short, the new rules state that the real estate professional needs to fully inform and educate the Seller of the remuneration payable so they know, in simple terms how much it will costs for the transaction.
New disclosure requirements require real estate professionals to include remuneration payable to a cooperating brokerage in the service agreement with the Seller and to disclosure remuneration details for reach offer presented to the Seller, at the time of offer.
SO, think about the last time you sold your house. It probably happened very quickly, you may have even Docusigned the contract without even really thinking about it. Well, these new changes will slow down this process and force agents to ensure their clients are fully informed.
Ban of Dual Agency
The main change is that licensees should no longer be permitted to engage in dual agency. Two key changes have been implemented:
- A ban on dual agency, with an extremely narrow exception.
- A new disclosure requirement if dual agency is practiced.
So a single licensee cannot act for more than one agency in a real estate transaction.
What do these changes mean for you?
These changes mean that certain services will need to be handled slightly differently from what was common in the past. It also means that certain services may not be able to be provided that were provided before. It also means that you will be asked to sign forms that confirm that you have read and understand them.
In the end, these fundamental changes will better protect consumers when purchasing or selling real estate and overall can be viewed as a positive move forward for our industry. I believe this will elevate the professionalism of the real estate industry and hopefully curb the handful of real estate agents out there that you have read about in news (that don’t have their clients best interest in mind). Of course, there are additional changes as of June 15, 2018 that I haven’t gone over, but those are the major ones.
If you are looking for more information or of course, interested in any real estate related investments – please don’t hesitate. We can sit down and sign “Disclosure of Representation in Trading Services” form before we do business 🙂